Bitcoin mining is a big business and one of the most lucrative subsections within the crypto market. Miners are the engine of the crypto space and the majority come from China. The nation according to Princeton University and Florida International University researchers hold 74% of miners in the world. With Chinese company Bitmain also mining half of the worlds Bitcoin, it would seem that the middle kingdom holds the hash rate and the power in the mining world.
Yet with this bear market, the life for miners in China has not been as profitable. To gain a greater insight into the mindset and issues facing Chinese miners, Chain News did an interesting interview with various industry insiders and it revealed some interesting revelations on a range of mining topics.
To begin with, the crucial issue when the money is tight and the market is down is electricity. Miners can never control the price of the tokens they mine, so when times are hard they look for things they can control in terms of price. Mining uses up a huge amount of power and as a result the price of electricity is vital for profit gains. Wang Xiayoi, a miner, said there were three ways to get hold of the necessary cheap electricity price:
“Many people are locals who build mines and then accept hosting, or drive to Sichuan and other places to visit; or through power plant intermediary to obtain information.”
Asia Crypto Today reported extensively on the various methods taken by miners, from moving to Iran as well as the hope for the Sichuan wet season. Xiayoi also revealed that some miners go directly to the power plants directly and go through an intermediary process to obtain the power or try the electricity companies directly.
Xiayoi claimed that he mined next to power plants, but unfortunately he often faces stability issues:
“Some brand power supplies will generate harmonics, which will affect the power supply. One has a problem, and then there are problems with tens of thousands of units, which will affect the power supply instability.”
Captain Yu, a miner who entered the business in 2016 highlighted the importance of infrastructure. He summed up the infrastructure, saying:
“The infrastructure cost is mainly low-voltage electrical equipment such as civil engineering, switchgear, transformers, etc., followed by racks, curtains, fans, and finally, network and routing.”
The infrastructure requires various pieces of equipment and the cost of the mine involves the distribution of transformers, strong electricity, and weak electricity, cooling costs, amongst an array of other things. The size and what time of container is used also plays a part. There are container mines which can be deployed quickly and flexibly. If electricity is unstable, they can be changed immediately. Mobile mines are easier to move around and
The issue of fraud and scams within the mining community is an important issue and, something those outside the industry may find surprising. According to Wang Weinan, a miner in China for a number of years, the industry is a dangerous place:
“The mining industry is simply a mining channel for mining machine dealers and mines, but there are some fake miners, or a small number of bad guys in the mining industry.”
Curiously, unlike most industries the unified body that connects all workers involved. The fact that those in circle are so un keen to share information and advice to their fellow colleagues makes life harder, certainly in terms of protecting against fraudsters.
Not only that, the lack of communication and insight also makes life harder for newcomers due to the lack of information available. Xiayo highlighted the lack of peer to peer interaction as a major pitfall within the industry, so decided to found the Mines College, a community that train qualified mining investors in the form of courses and accumulate preliminary resources for entering the industry to avoid stepping on pitfalls, with a further goal of helping establish industry standards and norms.
Starting out in the mining industry
With mining in somewhat of a decline due to the bear market, now is not the best time for the poor entrepreneur it may well have been a couple of years ago. Xiayo believes that those who can get into the business now are the mega rich, those with money and patience to burn:
“There are power resources, bosses in the real estate industry, pure financial investors, institutional investors.” He said, “There is money if you want to make money, but believe in the blockchain.”
Perhaps this insight says it all. Patience is a virtue and has to be owned if you are to succeed as a miner entering the business. Ultimately, the mining business is not a stable one and can fluctuate depending on market valuation, the weather, power supply and regulations. The life of a miner is tough but sucess can be paved in gold.